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Interest rates, usury and loan terms in Brazil: legal rate, who the usury cap binds, card and consumer limits

Last verified: 2026-10-27 · Status: Changing

Since August 2024 the default legal interest rate is Selic minus inflation (IPCA), never below zero, computed monthly by the Central Bank. The 1933 Usury Law, which caps interest at twice the legal rate and bans interest on interest, no longer applies to loans between companies, to securities, or to loans from banks, funds and other regulated lenders, so commercial rates are mostly free. Consumer credit still has hard limits: late fines of at most 2 percent, prepayment rights and, for credit card revolving debt, total interest and charges capped at the original debt.

USD figures use the Banco Central do Brasil PTAX selling rate of R$5.3346 per US dollar for 27 October 2026. Conversions are for orientation only.

Key facts

Default legal interest rate	Selic minus IPCA, floor zero Civil Code art. 406 § 1, as of 2026-10-27 · in force
Usury cap where the Usury Law still applies	2x legal rate Decreto nº 22.626 art. 1, as of 2026-10-27 · in force
Usury Law applies to loans between companies	No Lei nº 14.905 art. 3 I, as of 2026-10-27 · in force
Maximum late fine in consumer credit	2 % of installmentLei nº 8.078 art. 52 § 1, as of 2026-10-27 · in force
Cap on card revolving interest and charges	100 % of original debtLei nº 14.690 art. 28 § 1, as of 2026-10-27 · in force
Selic policy rate target in force	13.75 %BCB SGS series 432, as of 2026-10-27 · in force
Average rate on new credit to companies (August 2026)	19.75 % a yearBCB SGS series 20715, as of 2026-08-01 · in force

The rule

1. When interest is not agreed, agreed without a rate, or set by law, it follows the legal rate, which is the Selic rate minus the IPCA inflation index, treated as zero if negative. When a loan is for economic purposes interest is presumed due and, if no rate was agreed, the legal rate applies. Without an agreed or statutory index, monetary correction follows the IPCA.Lei nº 10.406 (Civil Code), arts. 389, 406 and 591 as worded by Lei nº 14.905 of 28 June 2024, Art. 389 sole paragraph; art. 406 caput and §§ 1 to 3; art. 591, 2024-06-28 official text · verified 2026-10-27 · changed: Lei nº 14.905/2024 (published 1 July 2024, effective 60 days later) replaced the old legal rate tied to the tax authority's late interest with Selic minus IPCA, floored at zero.

2. The CMN set the method: the legal rate for each reference month is the accumulated Selic factor of the previous month divided by the IPCA 15 factor of the previous month, expressed monthly with six decimals and applied as simple interest; a negative result is zero. The Central Bank publishes it.Resolução CMN nº 5.171 of 29 August 2024, Arts. 2 and 3, 2024-08-29 official text · verified 2026-10-27

3. The Usury Law forbids interest above twice the legal rate in any contract, forbids charging interest on interest except annual capitalization in current accounts, and limits the late interest increase to 1 percent.Decreto nº 22.626 of 7 April 1933 (Usury Law), Arts. 1, 4 and 5, 1933-04-07 official text · verified 2026-10-27

4. The Usury Law does not apply to obligations between legal entities; obligations represented by credit instruments or securities; obligations with financial institutions and other Central Bank authorized institutions, investment funds or clubs, leasing companies and simple credit companies, and credit civil society organizations; or transactions in the financial, capital or securities markets.Lei nº 14.905 of 28 June 2024, Art. 3, items I to IV, 2024-06-28 official text · verified 2026-10-27 · changed: Lei nº 14.905/2024 art. 3 took business to business loans and regulated lenders outside the 1933 Usury Law.

5. A bank credit note may provide for interest, capitalized or not, and its periodicity, plus monetary or FX indexation as allowed by law.Lei nº 10.931 of 2 August 2004, Art. 28 § 1, items I and II, 2004-08-02 official text · verified 2026-10-27

6. In consumer credit the lender must disclose the annual effective rate, total cost and installments; late fines cannot exceed 2 percent of the installment; and the consumer may prepay in whole or in part with a proportional reduction of interest and charges.
Example: Late installment of R$500: maximum fine R$10. / About US$93.73 installment, fine cap about US$1.87.Lei nº 8.078 of 11 September 1990 (Consumer Code), art. 52 as worded by Lei nº 9.298 of 1 August 1996, Art. 52 caput and §§ 1 and 2, 1996-08-01 official text · verified 2026-10-27

7. Total interest and financial charges on revolving credit and installment financing of credit card and other post paid instrument balances may not exceed the original debt. The CMN rule implementing the cap defines charges to include late fines, late interest, fees and commissions.
Example: Revolving balance of R$1,000: all interest and charges together capped at R$1,000. / Cap equal to the original debt, about US$187.Lei nº 14.690 of 3 October 2023, art. 28; Resolução CMN nº 5.112 of 21 December 2023 (amending Resolução nº 4.549), Art. 28 caput and §§ 1 and 2 (Lei nº 14.690); art. 2-A (Res. 4.549), 2023-10-03 official text · verified 2026-10-27

Lender and borrower	Usury Law applies?
Company to company	No
Bank, fund, leasing company or other regulated lender to anyone	No
Securities and credit instruments, market transactions	No
Individual to individual, or individual to company, outside those cases	Yes: cap at twice the legal rate, no compounding

Who the 1933 Usury Law still binds (Lei nº 14.905 art. 3)

Worked example

Interest when the contract is silent. A Brazilian company lends money to a supplier without fixing a rate. Interest is presumed (Civil Code art. 591) at the legal rate, the monthly Selic factor of the prior month net of IPCA 15 under Resolução CMN nº 5.171. With the Selic target at 13.75 percent (BCB SGS 432, October 2026) the legal rate is roughly the real Selic, so a written rate is usually better for both sides. Between two companies the parties can agree any rate, because the Usury Law does not apply (Lei nº 14.905 art. 3 I).

Step by step

1. Write the interest rate, index and capitalization into every loan; otherwise the legal rate and IPCA apply by default.
2. Check whether the Usury Law reaches the deal: only loans involving individuals outside regulated lenders and securities remain subject to the cap.
3. For intercompany loans from abroad, align the rate with transfer pricing and register the loan under the FX rules (see Foreign loans).
4. For consumer lending, build disclosures, the 2 percent fine cap, prepayment discounts and, for cards, the 100 percent charge cap into systems.

Common traps

Relying on old case law about the legal rate. Since 30 August 2024 the default is Selic minus IPCA, not the tax late interest rate (Civil Code art. 406 as amended).
Lending by an individual shareholder. Shareholder loans from an individual to the company are not in the art. 3 exemptions, so the twice the legal rate cap and the compounding ban may apply.
Treating the card cap as only interest. Fines, late interest, fees and commissions all count toward the cap (Resolução nº 4.549 art. 2-A as amended).
Comparing with Selic only. Average corporate lending cost 19.75 percent a year in August 2026 against a 13.75 percent Selic target (BCB SGS 20715 and 432).

Sources

← Investment funds and private equity (FIP) in Brazil: structure, CVM registration and tax for foreign investorsSecured lending and collateral in Brazil: fiduciary transfer, extrajudicial enforcement and the security agent →